The lost decade

The Census Bureau’s annual look at income and health coverage (based on surveys conducted in March) is out today. The rise in the poverty rate and in the percentage of Americans without health insurance got the headlines. But here’s a fact that for some reason the Census Bureau didn’t emphasize: The median household income in 2008 was $50,303. The median household income in 1999, expressed in 2008 dollars, was $52,748.

You’ve got to figure 2009 will see another decline in income, in which case Americans will end the decade significantly less well off than when they started it. We’re not just treading water. We’re going backwards.

Look at the historical series on median household income, which goes back to 1967, and you see that going backwards isn’t unprecedented—it always happens during recessions, and often continues for a year or two afterwards (which doesn’t bode well for 2010 and 2011). Brief spurts of forward progress in the late 1960s, late 1980s and late 1990s accounted for almost all of the income gains.

Still, the 2000s have been especially barren. Median income rose only in three years—2005, 2006 and 2007, and even at the cyclical peak in 2007 it was below the levels of 1999 and 2000.

This leads to a couple observations:

(1) I don’t know how much of this was bad luck and how much was bad policy (nobody does), but there’s really no getting around the fact that the Bush presidency was an economic debacle. Americans got poorer on his watch. The last time that happened was, well, during his father’s presidency. But that one only lasted four years, so it was different.

(2) We sure could use one of those income growth spurts about now. But I don’t see any signs of one in the offing. Do you?